No overseas issue from India in a year

MUMBAI, JAN 30: India has not been able to come out with a overseas depository programme for over a year. It is only on January 17 this y...

MUMBAI, JAN 30: India has not been able to come out with a overseas depository programme for over a year. It is only on January 17 this year that the roadshows for VSNL has started, more than a year after its previous GDR issue in 1997.

A host of reasons like the poor domestic market conditions, the Asian crisis, downgrading of India’s rating and poor performance of existing Indian GDRs have led to lack of interest for Indian shares abroad.

However, the overall depository receipt market also did not fare as well in 1998 as against 1997 where 152 new depository receipt (DR) programmes from 49 countries were established as compared with 204 programmes from 50 countries in 1997. Europe being the leading issuer with 113 new programmes (74 per cent), followed by Asia with 21 (14 per cent), Latin America with 11 (7 per cent) and Africa with 7 (5 per cent).

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The first euro denominated depository receipt was floated by Croatia. In total, 88 American depository receipts (ADR), 32 global depository receipt (GDRs)and 24 European depository receipt (EDR) programmes were floated last year. The total capital raised from depository receipts amounted to US dollar 8.3 billion in 1998, a decrease of 50 per cent from the dollar 18.6 billion raised during the year 1997.

The largest offering was from Equant NV of the Netherlands which raised US dollar 705 million in July. Europe was the leading capital mobiliser with s $ 9.6 billion new capital raised, followed by Asia $ 2.2 billion, Latin America $ 74 million and Africa $ 117 billion, said a study by Skindia Finance.

Meanwhile, global depository receipts (GDRs) of Indian companies declined on the overseas market last week. The Skindia GDR index decreased further by 9.40 points following the disappointing third quarter results and the correction in domestic markets. During the week, 60 GDRs on an average lost marginally by 0.38 per cent. As the fall in the underlying shares was more, the premiums of 60 GDRs inched upwards to 4.64 per cent on January 28 from 4.31 per centon January 21 while the average spreads of the 37 most actively traded GDRs at 8.08 per cent on January 28 from 8.23 per cent on January 21, indicating that the undertone remains positive.

In the industry-wise break up, GDRs from cable sector were highest gainers appreciating by 5.43 per cent followed by steel with 3.85 per cent and cement with 2 per cent. The top losers were telecom, aluminium and pharma shedding by 3.40 per cent, 2.18 per cent and 1.91 per cent respectively.